Strategy: Pending Short at 1.2978, Targeting 1.2830
Our short EURUSD position at 1.2982 was stopped out on a close above major falling trend line resistance set from May 2011. The upward breakout may be proving false however, with prices reversing sharply lower after putting in a bearish Dark Cloud Cover candlestick pattern at the top of a falling channel set from mid-September. Sellers have now broken a rising trend line set from the November 13 low, hinting at a larger move lower ahead. In the interest of improving risk/reward parameters, we will set up an entry order to enter short at 1.2978, initially targeting the 23.6% Fibonacci retracement at 1.2830. Once the trade is triggered, a stop-loss will be activated on a daily close above 1.3125.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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